INSUBCONTINENT EXCLUSIVE:
In part two of our survey that asked top VCs about the most exciting investment areas in real estate, we dig into responses from 10 leading
real estate-focused investors at firms that span early to growth stages across real estate specific firms, corporate venture arms, and
prominent generalist firms to share where they see opportunity in this sector
(See part one of our survey.)In part two of our survey, we hear from:Connie Chan, Andreessen HorowitzBrendan Wallace, Fifth WallNiki
Estate Technology) VenturesNima Wedlake, Thomvest VenturesTravis Connors, Building VenturesDavid Bates, Tamarisc VenturesConnie Chan,
Andreessen HorowitzWhat trends are you most excited in real estate tech from an investing perspective?While most people think about real
estate tech from the transaction perspective, I believe that every single part of the real estate value chain is ripe for disruption
On the construction and home maintenance side, we are facing an aging population of contractors, electricians and plumbers
As fewer people enter the trade, this is a great opportunity for a startup
Rentals are offline and fragmented, with the majority of renters still paying their rent with cash or check.As low-interest rates hold, many
People want to live in beautiful spaces, but everyone needs help with the design and remodeling process
Younger generations in particular are shocked and lost when they learn how many vendors and contractors they need to interface with for a
simple bathroom or kitchen remodel
At the end of the day, we end up having to go back and forth with service providers in person because there are major information gaps
online, just like in medicine
everything from construction to financing to rentals and home improvement
The amount of money spent in real estate is enormous, and the data and tools we use today are still based on insights from a decade ago.When
Yes, we turn to Zillow or Redfin when searching for a home to buy or rent, but what about everything that happens before and after that?The
market is not over-heated in the least
However, I do believe investors are starting to treat real estate tech companies differently than tech-enabled real estate companies
In the past few years, that nuance was less clear, but recent market events have forced investors to focus more on gross margins and
a rental screening or to help someone qualify for a mortgage
Chinese fintech companies in particular have been experimenting with using other signals besides a credit score to evaluate how responsible
someone might be.Plus any other thoughts you want to share with TechCrunch readersIf we think that the transportation industry is big, just
wait until we realize the size of the real estate market!Brendan Wallace, Fifth WallHow has the real estate technology ecosystem changed in
The fact that those questions felt valid only a few years ago tells the story of how the real estate technology ecosystem has evolved,
expanded, and institutionalized.In the last three years, real estate technology has arguably created more enterprise value and spawned more
unicorns than any other single industry sector in venture capital
Fifth Wall was fortunate to make early investments in many of those transformative businesses, such as Blend, Hippo, Loggi, Lime, Opendoor
In the first half of 2019, $14 billion was invested into real estate technology from the VC community
that technology for the real estate industry would become one of the largest and most attractive categories of venture capital
Real estate is the single largest industry in the U.S., yet historically has been one of the lowest spenders on IT
The industry was (and to a great extent still is) known as being a late adopter of technology solutions
were hired for the first time, large IT budgets have been allocated and are growing, and almost every major real estate owner now recognizes
that adoption of new technology is existentially critical to their future strategy.In part, this realization explains the dramatic growth in
the number of corporate investors in Fifth Wall: just two years ago Fifth Wall managed $212M from nine North American real estate
corporates, today we manage over $1 billion invested by more than 50 corporate strategic partners from eleven countries
estate technology companies, especially in the last few years
everything for real estate technology startups
Getting large real estate corporates to adopt a new technology is often deterministic
In addition, generalist VC firms typically lack the deep real estate relationships and domain expertise to drive distribution and adoption
of emerging technologies.This is why Fifth Wall raised its capital from the largest partners and customers of the very technologies in which
Fifth Wall wanted to be the connective platform to link new, emerging real estate technologies with the corporate partners that could serve
as the commercial distribution lanes for them globally
A perfect example of this would be the strategic partnership and investment Fifth Wall orchestrated between homebuilder Lennar, one of Fifth
strategically or financially
Real estate organizations can be especially slow-moving and bureaucratic, making it difficult to attract great venture investment talent
challenged.Fifth Wall is increasingly finding that real estate owners are electing to become a part of the Fifth Wall consortium as we can
now offer more distribution to any startup that any single corporate investor can offer investing on their own
Similarly, public market investors also have become critical of publicly-traded real estate corporates starting their own venture arms and
have instead favored large real estate investment trusts (REITs) investing in consortium-based funds like Fifth Wall and others
I would expect this trend to continue as more real estate corporates are looking to partner with dedicated consortium-based real estate
technology funds as opposed to maintaining their own CVC arm.What trends are you most excited in Real Estate tech from an investing
perspective?We think there is a profound and exciting opportunity right now at the intersection of real estate technology and sustainability
Real estate owners are incredibly exposed to sustainability risks: the industry consumes 40% of all energy globally, emits 30% of total
carbon dioxide, and uses 40% of all raw materials.There is significant and growing regulatory pressure at both the local and federal levels
Consumers and tenants of buildings are increasingly demanding heightened environmental standards for real estate assets
And finally, institutional investors are increasingly imposing sustainability requirements around their capital deployments.Meeting the
demands of stakeholders (regulators, tenants, and investors) is going to be an extraordinarily heavy lift for the real estate industry over
the next decade, and effectively leveraging technology and innovation to drive solutions at scale is going to be crucial in order to meet
Taken together, I believe the technologies to create more sustainable real estate assets represent a $1 trillion opportunity over the next
